Switzerland’s blockchain challenge is turning rules into business

The report by the Swiss Blockchain Federation assesses factors including implementation speed, market size and liquidity, AI and blockchain, and talent. Hostettler notes that its sensitivity analysis puts Switzerland between fourth and eighth place under different plausible weightings. His conclusion: the country remains in the extended top group, but no longer has an unquestioned place among the top three.

The benchmark gives Switzerland high marks for DLT infrastructure, regulatory clarity, legal finality, banking, custody and geopolitical stability. Hostettler points to digital settlement and custody work at SIX and BX Digital, alongside specialized banks, universities, foundations and consultants. In his view, the weakness is not the foundation but its commercial use: a gap remains between regulatory strengths and scalable applications.

Hostettler rejects nostalgia for the ICO boom, which included weak business models as well as experiments that generated useful expertise and infrastructure. Finma’s ICO guidance of February 16, 2018, applied existing protection principles to new token models, he says. The economic function, rather than the technology label, should guide treatment. But unfamiliar models may also call for new classifications and supervision that adapts over time.

He says Finma has made innovation a strategic concern and now treats it as part of technology-neutral, risk-based supervision. That does not remove the need for clearer responsibilities, realistic timelines, proportionate requirements and dependable decisions. Lengthy, uncertain licensing processes can make viable businesses uneconomic, Hostettler argues. But he cautions against blaming the regulator for every weakness in market size, liquidity or international reach: Finma cannot create global demand, while companies and banks must decide whether to fund pilots and bring them into regular use.

International structuring is another part of the answer, he writes. Switzerland’s small domestic market is a structural constraint, not a supervisory failure. Businesses can combine Swiss law, infrastructure and governance with EEA access through Liechtenstein or work with specialized partners elsewhere. Hostettler argues that the goal should be to make Swiss quality the core of international structures, rather than force every business into a purely Swiss form.

Stablecoins illustrate the opportunity. Almost 99 percent of stablecoin market capitalization is denominated in U.S. dollars. The often-cited annual on-chain volume of about $30 trillion is a gross figure; Visa estimates roughly $6.4 trillion after adjusting for bots, internal transfers and similar activity. Hostettler says that lower figure is still large enough to treat stablecoins as financial infrastructure. Switzerland need not lead issuance, he argues, but could compete in custody, governance, tokenization, settlement and cross-border structuring. Trade finance is a potential use case, although broad adoption in Swiss commodity trade finance has not been established. Hostettler calls for clearly defined pilots to move into production with sound reserve, anti-money-laundering, sanctions, custody and legal safeguards.